Question

Morgan Company reported the following items in 2013:

Net income $50,000
Dividends paid 6,000
Increase in accounts receivable 12,000
Increase in accounts payable 8,000
Purchase of equipment (capital expenditure) 9,000
Depreciation expense 3,500
Issue of notes payable 15,000
Calculate the following:
net cash provided by operating activities,

Answer 1

To calculate net cash provided by operating activities, start with the net income and make adjustments for non-cash items and changes in working capital.

Step-by-step explanation:

To calculate net cash provided by operating activities, we need to start with the net income and make adjustments for non-cash items and changes in working capital. The formula to calculate net cash provided by operating activities is:

Net cash provided by operating activities = Net Income + Depreciation Expense - Increase in Accounts Receivable + Increase in Accounts Payable

Using the given information, we can calculate:

Net cash provided by operating activities = $50,000 + $3,500 - $12,000 + $8,000 = $49,500